Duggan to business community: Help stop scrap-metal theft, volunteer to fix city systems

Detroit Mayor Mike Duggan takes questions from the audience as Crain's Detroit Business Editor-in-Chief Keith Crain moderates during the annual Newsmaker of the Year luncheon on Tuesday.

Detroit Mayor Mike Duggan rallied the metro Detroit business community today to help him with two things: volunteer their executives and help fight scrap-metal theft.

As its Newsmaker of the Year, Duggan spoke at Crain's 28th annual luncheon this afternoon, using the opportunity to ask for support for his plans to rebuild the city.

First, he joked with the crowd that he'd been a five-time "finalist" for Crain's Newsmaker of the Year before earning top billing. Turning around the Detroit Medical Center wasn't enough, he guffawed; earning the Newsmaker of the Year title required him to fail to file his residency papers correctly, forcing him to run for mayor as a write-in candidate — and then take office in the middle of a municipal bankruptcy.

David Hall / Crain's Detroit Business

Detroit Mayor Mike Duggan takes questions from audience members moderated by Crain's Detroit Business Editor-in-Chief Keith Crain during the Newsmaker of the Year luncheon Tuesday at MotorCity Casino Hotel.

"I hope you're still clapping for me like this a year from now," he told the sold-out crowd of 800 at the MotorCity Casino Hotel. "The city of Detroit is not as far away from being turned around as it looks."

Duggan had two specific asks of the attendees, though: Help him train city employees to operate more efficiently and support legislation currently in Lansing that would address scrap-metal facilities that buy illegally obtained materials.

Better systems

City employees are eager to rebuild the city and its systems, Duggan said, but they haven't had the opportunity to share their ideas.

He told the audience a story of riding along with a snowplow driver who explained that the routes were inefficient and that snow-removal could be better managed. But, Duggan said, when he asked the employee if he'd shared those ideas with his supervisor, the man responded: "You haven't been here very long."

In fact, Duggan said employees have told him their biggest challenge in the city are the supervisors and how they are promoted.

"They say it in front of the supervisors," Duggan said. "It's the darndest thing."

Duggan wants employees to learn lean-processing techniques so that they can assist him in breaking apart the city, piece by piece, assessing what's wrong and then fixing it, much the way he did for the DMC.

"The employees are dying to do this," he said. "When I ask them, 'Have you ever been on a lean processing team?' They don't know what I'm talking about. But they are dying to learn. They know this city's future depends on people moving in, not out, so that means better city services."

To make that happen, he asked crowd members to commit their own resources, to spend a month or two working with city employees on a particular issue.

"If your company has as one of its core skills the ability to tear apart a core process and measure the outcome, we need your help," he pleaded. "If you would, take one project — that could be part of something big like police response time or how we respond to water main beaks, which makes no sense at all — sign up and come in for a month or two and work with our employees so we can train our own employees."

Scrapping the city

Pending scrap-metal
legislation

Duggan called on attendees to support House Bill 4593, which has been winding its way through the Michigan Legislature; voting is expected in coming weeks. Duggan urged them to call any senators or representatives they know and explain why the legislation is important to the future of Detroit.

"We have to deal with the issue of the unsavory scrap metal dealers in the city of Detroit," he said.

"The businesses in this town are having to fence in their rooftop air handling units because they are being brazenly stolen," he added. "It costs twice as much to open here than the suburbs because of the insurance."

The legislation would expand the regulations for recycling metals and create a better paper trail to help law enforcement track thieves, identify stolen goods and track sellers who are operating outside the law.

In particular, it would change the way scrappers get paid and stop immediate transactions for cash. If they try to turn in a catalytic convertor, air-handling units or copper wire, Duggan said, the yard operator would have to mail them a check or require that the seller return in three days to receive payment.

The legislation would also require the scrap facilities to take a clear photograph of the sellers.

The bill has been hotly contested in Lansing, as scrap yards fight against regulations they say would be onerous. But Duggan didn't see that as a problem: "We have a number of very fine and reputable scrap yards, but you have some that are not."

DTE Energy Co. had to take matters into its own hands last year because scrap-metal thieves were costing it millions of dollars annually.

During a six-week period last fall, thieves broke into 22 of its local power sub-stations to steal copper cable, 20 of them in Detroit. In one instance, the thieves were so determined to gain access to a substation that they went into a manhole and broke through a wall, said DTE Chief Security Officer Michael Lynch.

A DTE investigator later found 2,000 pounds of cable clearly marked "DTE" from two of the substations at a local scrap yard, Lynch said.

DTE pressed charges, and the scrap yard owner and a scale operator were found guilty of a misdemeanor charge, Lynch said.

"That's an example of how the law could be changed to make it a 'real crime,'" he said.

Lynch said besides sub-station thefts, 32 of DTE's line and gas trucks were also robbed over a two-month period last year, Lynch said.

Thieves held DTE employees at gunpoint or threatened them in some other way while they took the scrap materials they wanted. Or, they waited until DTE servicemen went into a home's back yard before stripping a truck of the replacement parts on board.

DTE has since outfitted a couple of its trucks with surveillance cameras and parked them in neighborhoods, working in concert with Detroit Police Department officers.

Lynch said stronger prosecution of metal thieves is needed. Holding scrap yard operators accountable is also key, he said.

"If there wasn't a market for it, people wouldn't be stealing it," he said.

Other companies have changed their business practices as a result of metal theft.

Detroit-based American Axle Manufacturing Holdings Inc. began demolition of 1.9 million square feet of its shuttered Detroit Manufacturing Complex south of Holbrook Street.

To thwart scrappers from looting the complex while it's being demolished, American Axle hired 24-hour security for the site and is lighting up the site throughout nighttime hours, Chris Son, American Axle's director of investor relations, corporate communications and marketing, said in an email to Crain's.

The demolition company, Detroit-based Adamo Group Inc., also has its own security team on the site, Son said, declining to discuss the cost of those measures.

Local scrap yards say it's tough to know when scrap material is stolen.

"All of the regulations they impose on me in purchasing scrap metal are attempts to make me drive away stolen metals," said John Dingell, owner of Dix Scrap Iron and Metal in Detroit.

"It's virtually impossible to ensure that metal isn't stolen," he said, because you can change the nature of metal by melting it down and cutting it up.

Copper wiring, for example, usually has insulation. But it's worth only $1 per pound with the insulation, Dingell said. Some will burn the wire to get rid of the insulation before selling it for $2.50 per pound. That makes it tough to identify the wiring, which can also be used in machinery, automobiles and appliances, he said.

Under current law, Dix Scrap Iron and Metal and other scrap yards make a copy of a seller's identification, ask them to affirm they are the legitimate owner of the material and that they've never been convicted of non-ferrous metal theft before. They also take down a seller's license plate number, note the type of material brought in and the weight of material before getting a thumbprint from the seller.

"I have no way of checking the thumbprint right now," Dingell said.

"With the registry, I'd be able to check their ID against that, at least."

Under House Bill 4593, the industry could avoid the mandate for delayed payments, provided the industry maintain a searchable database in consultation with the Michigan State Police. The real-time database would track sellers and buyers of scrap metal and feature capabilities for law enforcement officials to "flag" violators.